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Cutting the Bank Down to Size: Efficient and Legitimate Decision-making in the European Central Bank After Enlargement

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  • Dorothee Heisenberg

Abstract

This article examines the problems enlargement poses for one specific supranational organization, the European Central Bank (ECB). The article synthesizes three different literatures, on enlargement, ECB transparency and legitimacy, and effective monetary policy-making, which up until now have not been linked. The three issues are related, and ought to be considered together when policy choices regarding institution-building are made, because the choices in one issue constrain those in the others. Specifically, the argument is that transparency in the decision-making process is key to allowing the denationalization of decision-making to make it more effective. The more transparent the policy-making process is, the easier it is to have a rotation of votes. Conversely, if the policy-making process is opaque, a system of combining regions into one voting entity is better because the citizenry is represented in every vote, even if in a highly diluted fashion. The proposed ECB reform does not adequately address legitimate concerns on the part of the public as to how the decisions are made within the Governing Council. Copyright Blackwell Publishing Ltd 2003.

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  • Dorothee Heisenberg, 2003. "Cutting the Bank Down to Size: Efficient and Legitimate Decision-making in the European Central Bank After Enlargement," Journal of Common Market Studies, Wiley Blackwell, vol. 41(3), pages 397-420, June.
    • Handle: RePEc:bla:jcmkts:v:41:y:2003:i:3:p:397-420
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    References listed on IDEAS

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    1. Angeloni,Ignazio & Kashyap,Anil K. & Mojon,Benoît (ed.), 2003. "Monetary Policy Transmission in the Euro Area," Cambridge Books, Cambridge University Press, number 9780521828642, May.
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    Cited by:

    1. Helge Berger, 2006. "Optimal central bank design: Benchmarks for the ECB," The Review of International Organizations, Springer, vol. 1(3), pages 207-235, September.
    2. Karl Kaltenthaler & Christopher J. Anderson & William J. Miller, 2010. "Accountability and Independent Central Banks: Europeans and Distrust of the European Central Bank," Journal of Common Market Studies, Wiley Blackwell, vol. 48, pages 1261-1281, November.
    3. Agnès Bénassy-Quéré & Edouard Turkisch, 2009. "The ECB Governing Council in an Enlarged Euro Area," Journal of Common Market Studies, Wiley Blackwell, vol. 47, pages 25-53, January.
    4. Helge Berger & Till Mueller, 2007. "How should large and small countries be represented in a currency union?," Public Choice, Springer, vol. 132(3), pages 471-484, September.
    5. Vollmer Uwe, 2004. "Wer entscheidet über Leitzinssatzänderungen?: Zur optimalen Verfassung des Zentralbankrats in einer Währungsunion," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 55(1), pages 287-312, January.
    6. Piotr Stanek, 2004. "How to assess proposals for enlargement reform of the European Central Bank," Revue de l'OFCE, Presses de Sciences-Po, vol. 91(5), pages 209-239.
    7. James Forder, 2005. "The limits of `independence' and the policy of the ECB^," Public Choice, Springer, vol. 125(3), pages 431-444, December.
    8. Ullrich, Katrin, 2004. "Decision-Making of the ECB: Reform and Voting Power," ZEW Discussion Papers 04-70, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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